Singapore officials fear the merger of Uber with Grab could cause service prices to escalate and users have less choice.
Uber has agreed to leave the Southeast Asian market, giving up the playing field to rival Grab. In a statement from Grab, the company said it has acquired Uber’s business in Southeast Asia, in return Uber will have a 27.5% stake in Grab.
According to the Financial Times, Singapore officials are concerned that the merger between Uber and Grab could violate competition laws.
Accordingly, the Singapore Competition Commission said on Friday it had opened an investigation into the deal and had “reasonable reason” to suspect that the competition was violated.
The watchdog said the incident could lead to “significantly reduced competition” in Singapore’s shared car market.
Before retreating from the Southeast Asian market, Uber sold its businesses in China and Russia. This could be the premise for an upcoming retreat in India, the Financial Times stated by banking experts.
Singapore’s competition watchdog said it has proposed interim measures to ensure the market remains competitive while it conducts its investigation. This includes requiring Uber and Grab to maintain their pre-transaction pricing policies for customers.
Singapore also requires Grab and Uber not to share confidential information related to customers, drivers and pricing.
Singapore has a voluntary merger notification system where companies can formally notify the watchdog if they are concerned that the merger violates competition rules. The watchdog official said that although Grab said it intends to submit an official merger notice, as of yesterday, March 30 has not yet received notification from the parties.
Uber’s withdrawal from Southeast Asia is one of the efforts to focus on the US and its key markets, as the company continued to lose $ 1.1 billion in the fourth quarter. The company has also been involved in many scandals last year, prompting former CEO and co-founder Travis Kalanick to leave.
Uber’s withdrawal from Southeast Asia is one of the efforts to focus on the US and its key markets, as the company continued to lose $ 1.1 billion in the fourth quarter.
The move out of the regional market also reflects influence from Softbank, Uber’s biggest investor, Grab, and India-based ride-hailing company Ola.
The Japanese tech company invested $ 9.3 billion in Uber last December. Rajeev Misra, a Softbank director on Uber’s board of directors, told the Financial Times earlier this year that Softbank pressed Uber to focus on key markets rather than global expansion.
Uber is also said to be in the process of approaching Ola (India) to merge with the company, amid Softbank is putting pressure. This merger will reduce the bitter rivalry between two companies that both have large shares of Softbank.
Over the past two years, Uber has sold their business to competitors like Didi Chuxing (China) and Yendex (Russia).
Lim Kell Jay, Director of Grab Singapore, told the Financial Times: “Improving service for passengers and drivers has always been our top priority, we urge the government to allow us to be free to compete and addition to the vast taxi market. To address consumer concerns, we have voluntarily committed to maintaining our price structure and will not increase base prices.
* Source: ICT News